Are concepts the most important part of a pitch? Or teams? This and more thoughts from StartupYard on how to get accepted into an accelerator.
As of this week, we’ve narrowed hundreds of applications for our 2015 accelerator round, down to a very special final 13. I hope none of them are superstitious. These 13 teams will be invited to join us at StartupYard this week for an all-day, in person workshop, including pitches, meetings with the StartupYard team, and selected StartupYard mentors. No more than 10 teams will be accepted to the accelerator, and we’re really excited about our choices this year.
We can’t tell you anything about any of the startups we’ve talked to (yet), but I can tell you a little bit about the process so far.
What are we looking for?
The interview process is pretty simple. It starts with a few questions that we ask all the startups: “What problem is your startup trying to solve?” and, “How did this project start?,” and similar queries. Then, reacting to the initial answers, we press the startups for clarifications, or for their ideas about how the products can be evolved, how they can be marketed and sold, and how they might become profitable. Why does the startup want to join an accelerator? Why ours? This helps us to gauge the communicativeness of the team, and their preparedness for our program, as well as giving us a basic overview of how they see their project developing in the near future.
But what we’re really looking for is, above everything, a great team. As a first-time evaluator, I’d seen interviews before, but I hadn’t voted on startups, and I hadn’t been one of the people asking questions. I was sometimes surprised by how little the actual product matters in the final decision about which teams we want to move on: The team matters the most. We talked to teams that had interesting products, but for which we could garner little collective enthusiasm, while other teams had objectively weaker products, but for which several of the evaluators fought vigorously because the team was so good.
More than just a great team, we are looking for great value. A team that is accomplished and knowledgeable is fine, but we also look for teams that can benefit the most from our program: teams that seem flexible enough to hone and expand their skills, and resilient enough to take a lot of negative feedback from us and our mentors. If a founder is brilliant but timid and rigid, unwilling or unable to engage in discussion and react to new ideas, then what difference can we make in the success of their startup? They may be aware that they need help, but they may be unable to take advantage of it when it’s offered. The product may be interesting, but if the founder doesn’t respond well to challenges, we won’t be able to improve his or her chances of success. To us, that’s good money after bad.
Doing it for the right reasons
Our managing director Cedric Maloux and I were chatting after our first day of interviews this week, when he asked me this: “Which of these startups do you think we’ll take for the right reasons?”
In my experience, the answer to that question can’t be known until we’ve worked with the startups for some time. In the interview process, you can try to be objective and to look at your job as picking teams and their ideas, and not your ideas of what the products they are working on could be. But this is always a danger.
It’s easy to see a lot of potential in other people and their ideas, because we don’t have any experience with those people. But sometimes, inevitably, we find that the founder doesn’t have the vision to execute the ideas that they can present so inspiringly. Perhaps the person is lazy, perhaps they fear failure, and they aren’t willing to risk enough to follow the vision they lay out, or perhaps they simply don’t see the potential in their own ideas that other people see there. Some people make great first impressions, but can’t sustain their charm.
In “Why Do We Love Tall Men?” an essay from his bestseller (and one of my favorite books) Blink, Malcom Gladwell postulates that the noted preponderance of tall men (the average CEO of a Fortune 500 company is nearly 8 cm taller than the average man) among the CEOs of Fortune 500 companies is part of a greater pattern. Specifically, that we have an idea about what we are usually looking for among leaders and successful people, and that we pick people to follow, help, and promote, based on that idea. If you seem to represent the ideal of, say, a startup founder, then you are more likely to be accepted to, say, an accelerator. And if you are accepted to an accelerator, you are more likely to succeed as a founder and the cycle will repeat, with others believing that the way you appear is connected with your success, that you were destined for what you achieved because you represent a preformed ideal.
But these preconceptions are dangerous. They not only lead us to believe in people for the wrong reasons; they also lead us to dismiss others who have enormous potential to succeed.
And these preconceptions are not just connected to appearance or to personal style. We can also be swayed by how apparently successful a product or a startup already appears to be, and we can be further swayed by the idea that this startup is “in the right space.” Is the startup a gaming company? They may tell you that gaming represents a $16 billion a year business. But why would that affect your decision about a particular team? You would hope that it doesn’t.
On the other hand, a startup in the same business as others that you have previously worked on, which have themselves failed to gain traction, may be associated in your mind with losers, that other application that did something similar failed, therefore this will fail too. As an evaluator, I caught myself thinking those thoughts from time to time.
Likewise, we tend to associate startups in crowded markets with “me too” ideas, even when the ideas are actually very unique, and solve a real pain in the industry they’re targeting. All industries that experience significant growth are crowded, and most dominant players in those industries weren’t the first. Competition and a dynamic marketplace can be good things, and we shouldn’t be afraid of them.
Startup nirvana and the fear of missing it
The evaluators chatted on the second day of interviews about “The Fear of Missing It.” This is the thing that looking at startups and seed-stage investments is really all about. When a startup pitches an idea, and you find yourself later that day, or that week, turning over the idea in your mind, and thinking about how you don’t want to be left behind, that is The Fear of Missing It. When we meet founders, and experience that fear, it’s very exciting. It rarely happens, but it means that the idea is something very special. It is an idea that may not be new, may not be completely unique, and may not be perfect, but that has the potential, if executed properly, to have a major impact.
More than that, the idea is not simply so broad or so generic that it can mean anything to anyone. It is obvious, but only obvious after seeing it in action. Sometimes, when we interview startups, 10 or 20 ways that the idea could succeed will simply present themselves in our minds. The possibilities seem enormous, and yet the idea remains very focused. This week, I took to calling it “Startup Nirvana.”
You are not a startup, or “productification”
A few months ago, I attended an accelerator conference in Paris hosted by Numa in Paris (home of Le Camping). One of the sessions discussed the problem of scouting and selecting startups, a problem every accelerator faces. One of the things that many of the other accelerator directors and managers complained of was “productification,” or “false startups.” These are companies, usually consultancies or design houses, that have prepared a particular technical solution for a particular client, or have developed an expertise in a particular area. Now they want to turn that technical solution or expertise into its own business. There is nothing wrong with doing this: It’s how tens of thousands of new businesses are born every year. But that doesn’t mean that the businesses they’re starting are, or should be, startups.
Startups are a particular animal: They are ideas that have 1) enormous growth potential 2) a time sensitive nature that requires them to be developed and grown quickly to succeed and 3) are exploiting an unproven product or market concept, attempting to be among the first to capitalize on an unknown, or unmet, market need. And StartupYard, like all accelerators, is built to capitalize on that kind of groundbreaking innovation. Slow and steady may win the race (and startups are supposed to transition into established companies eventually), but startups are a sprint at the beginning, and that’s where we can add real value.
A lot of companies apply to StartupYard, despite their being nothing like startups. They’re regular companies that have the potential to do good business, and to grow steadily and provide a nice income for their founders and their shareholders. What they don’t have is the potential to grow quickly, or on a global scale. We catch most of these in the application process, and they don’t continue.
But sometimes a company slips through to the interview stage because they are trying to “productify,” or make something into a product, when that isn’t how it was originally conceived. Often these are consultancies who are trying to automate their internal processes, and sell them on a broader market. Again, this is fine if it works, but if your business plan involves steadily gaining individual clients, and slowly refining your process to make it more cost efficient, that doesn’t necessarily make you a startup. Having an app doesn’t make you a startup, evidenced by the fact that there are many apps, popular ones, developed by non-startup companies.
Startups, as the saying goes, are supposed to “move fast and break things.” But that isn’t just a macho motto, or a style of working. It’s a basic difference in what type of business a company really is. We’re not all startups.
This post was originally published on StartupYard‘s blog.
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